Considering Advanced Micro Devices (AMD) as Q1 2024 Earnings Approach

Advanced Micro Devices (AMD) is preparing for the announcement of its first-quarter 2024 financial results on April 30. The company has provided revenue guidance for the quarter at around $5.4 billion, with a possible variance of plus or minus $300 million. Analyst consensus points to revenues of $5.42 billion, which would represent a modest year-over-year increase of 1.24%.

The consensus estimate for first-quarter earnings stands at 60 cents per share, a slight uptick from a month ago. Historically, AMD's earnings have surpassed the consensus estimate in three out of the last four quarters, averaging an earnings surprise of nearly 3%.

AMD's positive outlook can be attributed to its burgeoning portfolio and growing partnership base. Their fourth-generation EPYC processor continues to be adopted by major cloud service providers for a variety of internal and public cloud workloads.

During the fourth quarter of 2023, big tech players including Amazon, Alibaba, Google, Microsoft, and Oracle showcased over 55 cloud instances powered by AMD's technology, focusing on AI, HPC, and general cloud applications. By the end of 2023, over 800 cloud instances utilizing AMD's EPYC CPUs were available on the market.

AMD's Data Center Growth

AMD has made strides in the data center sphere with its latest Instinct MI300X accelerator. This innovation integrates CDNA 3 architecture with Zen 4 CPUs, enabling high performance for both HPC and AI tasks. Major industry players like Microsoft, Oracle, and Dell have incorporated these accelerators into their systems.

Furthermore, AMD's product lineup now includes the Ryzen 8040 series processor, featuring Ryzen AI, and Instinct MI300 Series data center AI accelerators. The company's ROCm 6 open software stack is also gaining attention with enhanced support for complex language models.

Financially speaking, AMD's Data Center GPU revenues are expected to show sequential growth in Q1, surpassing $3.5 billion in 2024. Data Center segment revenues are projected to be consistent with previous quarters, balancing a predicted decline in server sales with a ramp-up in Data Center GPU sales. Analysts project Data Center revenues to hit $2.28 billion, a significant 76% increase year over year.

Additionally, the AI PC market is poised to bolster AMD's revenue. The new Ryzen 8040 series processors, paired with the Ryzen AI NPU, have propelled AMD ahead in the AI-embedded PC market. Brands like Acer, Asus, Dell, HP, Lenovo, and Razer are already utilizing Ryzen 8040 series processors in their products.

AMD also reignited interest in the high-end desktop segment with the Ryzen Threadripper 7000 Series processors. In the laptop arena, the Radeon RX 7900M graphics processor has launched as AMD’s fastest GPU for laptops, expected to contribute significantly to the company's revenue.

An improving PC market is likely another source of AMD’s revenue growth, with IDC reporting a 1.5% increase in PC shipments in Q1 2024 compared to the same period last year. Market dynamics show Lenovo and HP experiencing growth, while Dell saw a slight decrease. Client segment revenues are forecasted to be $1.206 billion, marking a notable year-over-year growth of 63.2%.

AMD, Earnings, Technology